By Akracia – Fenikso Nigra
Brazil’s basic interest rate reached 13.25% per year in January 2025, with forecasts pointing to 15%. The Central Bank’s Monetary Policy Committee presents this decision as a necessary technical measure to control inflation. However, each percentage point of this rate represents concrete choices about resource distribution, access to credit, and the country’s economic priorities.
When the Central Bank raises interest rates, it claims to be fighting inflation. The mechanism works like this: high interest rates make loans and financing more expensive, reducing consumption and productive activity. Less money circulating should contain price increases. In practice, this policy transfers income from those who work and produce to those who live off financial investments. Public bonds that yield according to the basic rate are paid with federal budget resources—resources that could finance health, education, or infrastructure.
The immediate consequences reveal the impact of this decision. Families planning to finance housing face unaffordable payments. Small businesses that depend on credit for working capital see their margins disappear. Productive investments become less attractive when financial applications guarantee high returns without risk. Meanwhile, banks and investors celebrate record profits.
The official narrative claims there is no alternative. Inflation must be fought this way, as if it were a natural law of economics. This presentation conceals that there are other causes for price increases beyond excess demand. In recent Brazil, basic foods rose due to climatic factors and exchange rate variation. Meat, eggs, and coffee became more expensive due to supply issues, not because people were consuming too much. Raising interest rates does not solve production problems but punishes the entire population.
Inflation itself has a political dimension that is often ignored. Large companies with market power adjust prices according to their interests, not just in response to costs. Fuel distributors, supermarket chains, and concentrated industries define profit margins that directly impact the cost of living. Attacking inflation only from the demand side, through interest rates, means accepting these power structures as natural.
International comparison reveals political choices disguised as technical necessities. Other countries face inflationary pressures with policy combinations: price controls in strategic sectors, strengthening competition, infrastructure investment to increase supply. In Brazil, the single tool is the interest rate, convenient for those who profit from it.
Historical experiences demonstrate other possibilities. Quilombola communities in Brazil maintain rotating credit systems based on mutual trust and collective need. Community funds finance small enterprises without interest or with symbolic rates defined by the community itself. These practices demonstrate that organizing credit and investment does not require submission to globalized financial markets.
In Argentina, during the economic crises of the early 2000s, exchange networks and community banks allowed entire neighborhoods to maintain economic activity when the traditional banking system collapsed. Local currencies and mutual credit systems sustained families and small businesses. In Uruguay, credit cooperatives controlled by workers have offered alternatives to the commercial banking system for decades.
The argument that high interest rates attract foreign investment deserves critical attention. International capital that comes to the country only to invest in public bonds does not build factories, does not generate jobs, does not develop technology. This is pure rentierism: money that enters, receives high interest paid with taxes from the population, and leaves again. Defending this dynamic as economic development reveals clear priorities.
Various anarchist strands emphasize self-management of productive resources and decentralized decision-making about investments. This is not about denying the complexity of contemporary economics, but about questioning why fundamental decisions about credit, interest rates, and investment priorities need to be concentrated in hierarchical institutions distant from those who actually produce and live with the consequences.
Recognizing that the interest rate is not a neutral instrument opens the way for practical action. Credit cooperatives controlled by those who use their services can define rates based on mutual sustainability, not profit maximization. Community banks in Brazilian urban peripheries demonstrate the viability of financial systems organized according to other logics. Solidarity economy networks build credit and exchange circuits based on reciprocity.
The central question is not technical but political: who decides about collective resources and according to what criteria? When the Central Bank raises interest rates to 15%, it is not just fighting inflation. It is choosing to protect rentiers, make productive credit more expensive, slow down economic activity, and transfer income to the top of the pyramid. These choices can and must be contested.
In struggle, we are dignified and free people!
